Appendix E: Comparison with Australian Productivity Commission experiment

A scenario was undertaken assuming a 4.6 percent above-baseline increase in labour supply (scenario I). Scenario I was generated to enable broad comparisons with results reported by the Productivity Commission (2006), which investigated the impact of immigration on the Australian economy using the MONASH model. Table E1 lists the macro results of the two simulations.

In broad gross domestic product terms, it can be argued that the two simulations are comparable. However, there are noticeable differences in composition. The Australian impact is dominated by the investment and capital responses. In comparison, the investment and capital responses in the New Zealand simulation are more muted.

This difference could be related to differences in the modelling routines; the MONASH model incorporates dynamic effects. In contrast, the Business and Economic Research Limited computable general equilibrium model provides a static 'snapshot' picture of impacts associated with a shock. In turn, the increased import ratio found in the Australian simulation could be related to the import requirements of the increased investment demand.